Five reasons not to ‘sell in May and go away’

There’s a Wall Street adage that says investors should “Sell in May and go away.”

The numbers don’t lie. The May-through-October period historically is the weakest six-month span for stocks, with the S&P 500 index posting average gains of 1.4%, LPL Financial says. Its November to April gain? 7%.

But LPL says this year might be the year to hold on to your stocks. Here are five reasons why:

1. Market strength heading into May. Since 1950, the 48 times the S&P 500 has been above its long-term trend-line heading into this weak period, its average gain has been 2.8%, double the average for all years, LPL data show.

2. Bull market is global. It’s not just U.S. stocks in rally mode. Stock market strength is a worldwide phenomenon, with many world markets at or near record highs. The broad rally “may help lessen the potential for a big ‘sell in May’ event,” LPL says.

3. Earnings growth is strong. U.S. companies are on pace to grow profits at a nearly 15% pace in the first quarter of 2017, its best quarter since 2011. And most CEOs have offered upbeat future outlooks.

4. Economy is healthy. Nine years into the recovery, the economy is still expanding and is likely to grow for the next 12 to 18 months. “In the absence of recession,” LPL says, “any market declines tend to be more modest.”

5. New highs beget new highs. “If you bought at an all-time high, the S&P 500 was, on average, 0.5% higher after one month,” LPL says. “After three months the gain was 1.8%, and after one year, the gain was 7.9%.”